COVID ECONOMICS VETTED AND REAL-TIME PAPERS ISSUE 71 10 MARCH 2021 MANDATED AND SPONTANEOUS DISTANCING Martin Bodenstein, Giancarlo Corsetti and Luca Guerrieri EPIDEMICS AND TAX REFORMS A K-SHAPED RECOVERY? Sanjeev Gupta and João Tovar Jalles Michael Dalton, Jeffrey A. Groen, Mark A. Loewenstein, David S. Piccone Jr. HOW DO AUSTRALIAN WOMEN and Anne E. Polivka COPE? THE FINANCIAL CRISIS AND COVID Megan Godwin, Stephen Whyte, Rebekah Russell-Bennett and Uwe Dulleck Antonio Moreno, Steven Ongena, Alexia Ventula Veghazy and FOOTBALL MATCHES Alexander F. Wagner Kai Fischer Covid Economics Vetted and Real-Time Papers Covid Economics, Vetted and Real-Time Papers, from CEPR, brings together formal investigations on the economic issues emanating from the Covid outbreak, based on explicit theory and/or empirical evidence, to improve the knowledge base. 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Chan School of Maarten Lindeboom, Vrije Universiteit Public Health Amsterdam Tito Boeri, Bocconi University and CEPR Philippe Martin, Sciences Po and CEPR Alison Booth, University of Essex and CEPR Warwick McKibbin, ANU College of Asia and Markus K Brunnermeier, Princeton the Pacific University and CEPR Kevin Hjortshøj O’Rourke, NYU Abu Dhabi Michael C Burda, Humboldt Universitaet zu and CEPR Berlin and CEPR Evi Pappa, European University Institute and Luis Cabral, New York University and CEPR CEPR Paola Conconi, ECARES, Universite Libre de Barbara Petrongolo, Queen Mary University, Bruxelles and CEPR London, LSE and CEPR Giancarlo Corsetti, University of Cambridge Richard Portes, London Business School and and CEPR CEPR Fiorella De Fiore, Bank for International Carol Propper, Imperial College London and Settlements and CEPR CEPR Mathias Dewatripont, ECARES, Universite Lucrezia Reichlin, London Business School Libre de Bruxelles and CEPR and CEPR Jonathan Dingel, University of Chicago Booth Ricardo Reis, London School of Economics School and CEPR and CEPR Barry Eichengreen, University of California, Hélène Rey, London Business School and Berkeley and CEPR CEPR Simon J Evenett, University of St Gallen and Dominic Rohner, University of Lausanne and CEPR CEPR Maryam Farboodi, MIT and CEPR Paola Sapienza, Northwestern University and Antonio Fatás, INSEAD Singapore and CEPR CEPR Pierre-Yves Geoffard, Paris School of Moritz Schularick, University of Bonn and Economics and CEPR CEPR Francesco Giavazzi, Bocconi University and Paul Seabright, Toulouse School of CEPR Economics and CEPR Christian Gollier, Toulouse School of Flavio Toxvaerd, University of Cambridge Economics and CEPR Christoph Trebesch, Christian-Albrechts- Timothy J. Hatton, University of Essex and Universitaet zu Kiel and CEPR CEPR Karen-Helene Ulltveit-Moe, University of Ethan Ilzetzki, London School of Economics Oslo and CEPR and CEPR Jan C. van Ours, Erasmus University Beata Javorcik, EBRD and CEPR Rotterdam and CEPR Simon Johnson, MIT and CEPR Thierry Verdier, Paris School of Economics Sebnem Kalemli-Ozcan, University of and CEPR Maryland and CEPR Rik Frehen Ethics Covid Economics will feature high quality analyses of economic aspects of the health crisis. However, the pandemic also raises a number of complex ethical issues. Economists tend to think about trade-offs, in this case lives vs. costs, patient selection at a time of scarcity, and more. In the spirit of academic freedom, neither the Editors of Covid Economics nor CEPR take a stand on these issues and therefore do not bear any responsibility for views expressed in the articles. Submission to professional journals The following journals have indicated that they will accept submissions of papers featured in Covid Economics because they are working papers. Most expect revised versions. This list will be updated regularly. American Economic Journal, Applied Journal of Economic Theory Economics Journal of the European Economic American Economic Journal, Association* Economic Policy Journal of Finance American Economic Journal, Journal of Financial Economics Macroeconomics Journal of Health Economics American Economic Journal, Journal of International Economics Microeconomics Journal of Labor Economics* American Economic Review Journal of Monetary Economics American Economic Review, Insights Journal of Public Economics American Journal of Health Journal of Public Finance and Public Economics Choice Canadian Journal of Economics Journal of Political Economy Econometrica* Journal of Population Economics Economic Journal Quarterly Journal of Economics Economics of Disasters and Climate Review of Corporate Finance Studies* Change Review of Economics and Statistics International Economic Review Review of Economic Studies* Journal of Development Economics Review of Financial Studies Journal of Econometrics* Journal of Economic Growth (*) Must be a significantly revised and extended version of the paper featured in Covid Economics. Covid Economics Vetted and Real-Time Papers Issue 71, 10 March 2021 Contents Economic and epidemiological effects of mandated and spontaneous social distancing 1 Martin Bodenstein, Giancarlo Corsetti and Luca Guerrieri The K-shaped recovery: Examining the diverging fortunes of workers in the recovery from the COVID-19 pandemic using business and household survey microdata 19 Michael Dalton, Jeffrey A. Groen, Mark A. Loewenstein, David S. Piccone Jr. and Anne E. Polivka Misfortunes never come alone: From the financial crisis to the Covid-19 pandemic 59 Antonio Moreno, Steven Ongena, Alexia Ventula Veghazy and Alexander F. Wagner Can Covid-19 induce governments to implement tax reforms in developing countries? 83 Sanjeev Gupta and João Tovar Jalles Coping with Covid: Australian women’s coping responses during the Covid-19 pandemic 112 Megan Godwin, Stephen Whyte, Rebekah Russell-Bennett and Uwe Dulleck Thinning out spectators: Did football matches contribute to the second COVID-19 wave in Germany? 137 Kai Fischer 1 Covid Economics Issue 71, 10 March 2021 Economic and epidemiological effects of mandated and spontaneous social distancing1 Martin Bodenstein,2 Giancarlo Corsetti3 and Luca Guerrieri4 Date submitted: 24 February 2021; Date accepted: 24 February 2021 Based on a standard epidemiological model, we derive and apply empirical tests of the hypothesis that contacts, as proxied by mobility data, have an effect on the spread of the coronavirus epidemic, as summarized by the reproduction rates, and on economic activity, as captured by subsequent initial claims to unemployment benefits. We show that changes in mobility through the first quarters of 2020, be it spontaneous or mandated, had significant effects on both the spread of the coronavirus and the economy. Strikingly, we find that spontaneous social distancing was no less costly than mandated social distancing. Our results suggest that the rebound in economic activity when stay- at-home orders were lifted was primarily driven by the improvement in epidemiological parameters. In other words, without the reduction in the reproduction rate of the coronavirus, we could have expected a doubling down on spontaneous social distancing. Covid Economics 71, 10 March 2021: 1-18 1 This paper is a section of "Social Distancing and Supply Disruptions in a Pandemic", a paper we wrote in the spring of 2020 and recently revised bringing the model to bear on the evolution of the COVID-19 pandemic in the first quarters of the year (see Bodenstein,